Search for a New Balance in War Risk Insurance: Scope, Premium, and Geographical Threat

For Turkish shipowners, particularly those engaged in trade within the Black Sea basin, war risk insurance remains one of the most critical topics on the agenda. During a panel held as part of the Marine Insurance Turkey symposium, the evolution of Extra War Risk Insurance (EWRI) structures, premium volatility, capacity constraints, and voyage-specific solutions were discussed.

The panel, moderated by Burak Gökçe Çavuş, Managing Partner of Cavus & Coskunsu Law Office, featured Emin Yaşacan, Founder and General Manager of Kuzey Marine Insurance Brokers, Ben McKeith, Senior Underwriter at The London P&I Club, and Nick Maddalena, General Manager of Ambrey Global Specialty. The session focused on the scope of war risk coverage, exclusions, triggering elements, and damage management in high-risk trades.

Is the Current Structure Working? The panelists agreed that the vast majority of insured parties do not fully understand the scope of coverage. Senior underwriter McKeith emphasized that the current framework is fundamentally sound; however, shipowners and brokers often fail to fully assess the time conditions required for a construction total loss claim. According to McKeith, when war coverage is not properly tested, the insured often focuses solely on the premium level, only realizing the true breadth of the coverage at the time of a loss.

Another critical point highlighted during the panel was the necessity of having no gap between where the H&M (Hull & Machinery) policy ends and where the war risk coverage begins. McKeith stated that a seamless transition between the two coverages is essential for the protection of shipowners.

Economic Tension Between Annual Coverage and EWRI One of the most striking findings of the panel was regarding the economic sustainability of annual war risk coverages. McKeith noted that annual premiums are being offered at extremely low levels—sometimes effectively free—while actual premium calculations are made through additional premiums for entry into listed high-risk areas.

However, the panelists pointed out that the current conflict geography is challenging this classic structure. The issue of proximate cause arising from limpet mine attacks was discussed as a concrete example: Should the location where the mine was attached or where it detonated be considered? Events occurring in the Mediterranean, off the coast of Mersin, or along the shores of Senegal—i.e., outside listed risk areas—remain the responsibility of the annual war risk provider, creating a significant economic gap in the sector.

The Black Sea Threat and the Position of Turkish Shipowners The most sensitive topic for Turkish shipowners during the panel was the Black Sea. Issues such as drone and missile attacks, the detention of vessels in ports, and crew safety were raised. The question of which coverage would apply to crew wages when a shipowner's vessel is damaged by a drone strike became one of the concrete discussion points of the panel.

A survey conducted in the room revealed that shipowners prioritized premium levels as their first concern when purchasing war risk insurance; the breadth of coverage, damage management capacity, and charter party requirements were secondary. Panelists regarded this finding as one of the most significant issues facing the sector.

The Biggest Challenge Ahead Responses to the moderator Çavuş's question directed at each panelist, 'What will be the biggest challenge for the war risk market in the coming years?' can be summarized as follows: McKeith stated that a more balanced alignment between premium and coverage breadth needs to be established; while acknowledging that premium will always be a primary determinant, shipowners must be much more conscious about the scope. He emphasized that considering the Black Sea threat and the current conflict geography, the classic premium logic needs to be rethought.

Yaşacan noted that with new insurers entering the market, premium levels will continue to be under pressure; however, he pointed out that capacity withdrawals have also occurred during periods of intensified conflicts, stressing that the sustainability of premium production is the most critical issue facing the sector.

General Assessment The panel concluded that the existing war risk insurance framework is fundamentally functional; however, in light of the geographical spread of conflicts, the diversification of proxy wars, and the reconfiguration of the threat map by unmanned systems, the economic balance of the classic annual coverage + additional premium structure needs to be re-evaluated. It was confirmed that for Turkish shipowners, the Black Sea remains the top priority risk area, while events in the Mediterranean and more distant geographies have now also become an integral part of the war risk portfolio.

Source: SeaNews Türkiye